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A digital world order

Internet savvy startups are attacking industries and killing old businesses across the globe. In these pages, I’ve written about more than 150 such companies over the last four years. Due to work obligations, I’ve stopped writing.

But here is a five-year plan that can be used to prioritize career and business strategy.

Year One: Self-identify as a technology company.

The businesses that suffer most have developed a culture of pride in their history that blinded them to the fact that they were once a young company embracing new technology. Self-identify as a technology company and there is a mental shift that results in innovation.

A furniture company should identify as a technology company that makes furniture. Real estate management companies should identify themselves as technology companies that manage real estate.

Pay attention to those in your industry that self-identify as internet and technology companies, they may know something you don’t. And even if they are ignorant, their culture as a technology company makes them well positioned to discover something of value through trial, error or data.

Year Two: Find unique data sources.

Identify the data most useful to your industry. There is probably a startup looking to collect that data to package it into information to sell to slow companies like yours or technology driven startups trying to compete with yours. Get to the information first and you will have an edge over competitors old and new.

Seek companies well positioned to collect useful data, they may be unrelated to your primary business and they may not be technology companies. The most valuable will be those companies that have failed to self-identify as technology companies and don’t have a culture conducive to innovation.

Did you know taxi drivers in most cities in the world keep a handwritten logbook of the pickup, drop-off time, location and revenue? Recently I asked a driver what he does with the log. Nothing, he said! He keeps it just in case he needs to prove he was somewhere at a specific time. If you found this data useful you could probably get it for free if you provided the driver a small benefit in exchange.

The process of discovering data and packaging into information for your business needs will position you for growth. With a technology company culture, your people will now be on the lookup for these opportunities.

Year Three: Find a market to sell your information byproducts.

Google and Facebook do two things really well, collect data and turn data into information that can be resold. They make a lot of money teaching technically unsophisticated businesses how to combine their institutional knowledge and wisdom to monetize data and information.

Shockingly they often do this using data provided by the businesses themselves. It’s the equivalent of a currency exchange where you give me coins and I give you bills of equal value minus a 25% fee. It should surprise no one that their success at this model has them growing faster than the companies they serve. How could it not?

Rockefeller made his first fortune through R&D, developing new products from oil byproducts that refineries discarded. Once that value was unlocked he could only grow by owning more refineries.

Sell your information byproducts to anyone you can teach to harness its value. They will give you money and data in exchange for your innovation.

Focus on startups inside and outside of your market with a transactional pricing model. Servicing startups allow you to grow with your customers and breed a company culture of innovation through association. Startups are less likely to steal your unique data collection methods given their early stage need for focus. A problem you will encounter trying to sell into established companies in your market.

This isn’t your primary business, yet, but if one your customers becomes a success, it will become a significant source of revenue as the competitors in its industry race to you for help surviving.

Year Four: Monopolize data sources

When you provide information there is nothing stopping the customer from reverse engineering it and bypassing you. This is called Arrows Information Paradox.

Established companies understand this paradox well when working with advanced technology companies. As a result, they try to provide as little information and data to these companies as possible and when practical they share no knowledge or wisdom. To grow, technology companies must do an end run around established companies to gain control of data sources.

As a result, we now have “smart phones” “smart thermostats” “smart watches” and “smart cars.” All sorts of other things no one ever told us were dumb are now smarter because it puts someone in control of data.

Turning data into valuable information is limited only by imagination but generating data is limited by activities performed throughout the course of a day. Find an activity that generates data that can be turned into valuable information products and try to monopolize it.

It may be appealing to think about making a new smartphone operating system, or smart TV and such, but you may be more successful monopolizing something less interesting such as door knobs, light switches, carpets or pillow cases. There are funded startups doing three out of the four I just mentioned.

Monopolize the source, not the information. Make the information easily available and affordable. Businesses die every day because they monopolized a technology but refused to provide an easy way for others to build upon or extract the information it generated.

Over the years I’ve noticed these traits of successful startups:
• Self-identified as a technology company in industries not known for technology
• Use data sources in ways that are not obvious to others in their industry
• Use byproduct information to make other businesses successful through technology
• Gained a monopoly over a data source to fuel their growth as an information and data-focused technology company

Goldman Sachs has more programmers than Facebook and Linkedin combined. We live in a digital world order where data and information are not only critical to business but the business itself.